Is the Sky the Limit? An Analysis of High-Rise Office Buildings

Hans Koster, Piet Rietveld and Jos N. van Ommerren

SERC Discussion Papers from Centre for Economic Performance, LSE

Abstract: Modern central business districts are characterised by high-rise office buildings. Helsley and Strange (2008) argue that skyscrapers are caused by agglomeration economies and a prize for being the tallest, so a reputation effect. We aim to test the relevance of this model by investigating the impact of building height on commercial office rents. The results show that firms are willing to pay about 4 percent more for a building that is 10 meters taller, which we interpret as the sum of a within-building agglomeration effect and a reputation effect. Using semiparametric techniques, we disentangle reputation effects from agglomeration effects and demonstrate that the reputation effect is substantial for tall buildings. For example, it is at least 17.5 percent of the rent for a building that is 6 times the average height.

Keywords: commercial buildings; building height; landmarks; reputation effect; semiparametric regression; agglomeration effect (search for similar items in EconPapers)
JEL-codes: R30 R33 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Is the sky the limit? an analysis of high-rise office buildings (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:sercdp:0086

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